# Economics (318) - April' 2011 | NIOS SENIOR SECONDARY Solved Papers

## ECONOMICS (April’ 2011)(318)NIOS SENIOR SECONDARY Solved PapersTime: 3 HoursMaximum Marks: 100

Note : (i) This Question Booklet consists of two Sections, viz., ‘A’ and ‘B’.
(ii) All questions from Section ‘A’ are to be attempted.
(iii) Section ‘B’ has got more than one option. Candidates are required to attempt questions from one option only.
SECTION–A
1. Give the meaning of fixed investment.            2
Ans.:- Fixed investment in economics is the purchasing of newly produced fixed capital. It is measured as a flow variable – that is as an amount per unit of time.
Thus, fixed investment is the accumulation of physical assets such as machinery, land, buildings, installations, vehicles, or technology.
2. Distinguish between primary data and secondary data.            2
Ans.:- The following are the differences between primary data and secondary data:-
 Basis Primary data Secondary data Definition Primary data are those data which are collected originally. Secondary data refer to those data which are collected through other sources. Nature of data Primary data are in the form of raw-material to which statistical methods are applied. Secondary data are in the form of finished product as they have already been statistically applied.

3. National income is Rs 5,000 crores and domestic income is Rs 4,800 crores. Calculate net factor income from abroad. 2
Ans.:- Net factor income from abroad = Net income – domestic income
= 5000 – 4800
= 200 crores
4. What are real flows?                 2
Ans.:- Real flows refer to the flow of the actual goods or services, while money flows refer to the payments for the services or consumption payments.

5. What is meant by land in economics?               2
Ans.:- Land, in economics, the resource that encompasses the natural resources used in production. In classical economics, the three factors of production are land, labour, and capital. Land was considered to be the “original and inexhaustible gift of nature.”

6. A firm’s value of output is Rs 20,000. Its opening stock and closing stock are Rs 3,000 and Rs 1,000 respectively. Calculate its sale.                                2
Ans.:- Sale = opening stock + output – closing stock
Sale = 3000 + 20000 – 1000
Sale = 22000

7. State the law of demand.                                        2
Ans.:- In microeconomics, the law of demand states that, ”conditional on all else being equal, as the price of a good increases, quantity demanded decreases; quantity demanded”. In other words, the law of demand describes an inverse relationship between price and quantity demanded of a good.

8. Is Indian economy a developing economy? Give two reasons in support of your answer.        2
Ans.:- Yes Indian economy is a developing economy
The following are the reasons
a)      Low Per Capita Income (PCI):- According to the World Bank’s Report, n 2017, India’s PCI was \$ 1940 and was ranked 138 out of 184 countries. Therefore, we can conclude that the per capita income of an Indian resident is lower than most countries in the world.
b)      Occupational Pattern- Primary Producing:- a majority of the population is engaged in agriculture (around 52 percent). However, in 2011-12, the contribution of agriculture to the national income was only 13.9 percent. This disparity is slowing India’s progress.

9. From the following data, calculate closing stock:         2
1)            Stock investment) (–) 7,000
2)            Opening stock  8,000
Ans.:- Closing stock = opening stock + invested – sales
Closing stock = 8000+ (-7000)
Closing stock = 1000
10. What does an outward shift of production possibility curve show?                  2
Ans.:- The other meaning of economic growth is an increase in what an economy can produce if it is using all its scarce resources. An increase in an economy’s productive potential can be shown by an outward shift in the economy’s production possibility frontier (PPF) OR Curve.

11. Describe any two main features of Indian economic policy before 1991.        5
Ans.:- Two main features of Indian economic policy before 1991 are:-
1. Agriculture Based Economy:- Agriculture and allied sectors provide around 14.2% of Indian GDP while 53% of total Indian population is based on the agriculture sector.
2. Over population:- in every decade Indian population get increased by about 20% During the 2001-11 population increased by 17.6%. Currently India is adding the total population of Australia every year. India is the possessor of around 17.5% population of the whole world.

12. From the following frequency distribution, prepare a ‘more than’ cumulative frequency distribution:           5
 Class Frequency 10-20 20-30 30-40 40-50 50-60 12 15 14 13 11
Solution:-
 Class Frequency More than Cumulative frequency 10-20 20-30 30-40 40-50 50-60 12 15 14 13 11 More than 10 = 12+15+14+13+11=65 More than 20 = 15+14+13+11 = 53 More than 30 = 14+13+11 = 38 More than 40 = 13+11 = 24 More than 50 = 11 More than 60 = 0

13. Explain the meaning and four strategies of sustainable development.                    5

Ans.:- Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations.

Four strategies of sustainable development in our locality are:-

(i)                  Use of Eco-Friendly Fuel the fuels such as petrol and diesel emit huge amount of carbon dioxide that add to the Green House impact. In order to control pollution, the use of CNG and LPG should be promoted.

(ii)                Use of Renewable Resources, India being a tropical country is well endowed with sunlight, water and wind energy. These natural resources are renewable and pollution free. Thus, attempts should be made to harness solar and wind energy by employing different technologies it would help in sustainable economic development.

(iii)               Recyclable Products The household waste materials like newspapers, old bottles, used batteries etc should be accumulated and should be distinguished as bio-degradable and non-biodegradable wastes.

(iv)              Judicious use of Electricity, Electricity is a resource which is used in all households in our locality. It is one such resource which is already in short supply and may not be available to future generations if we do not start using it judiciously.

14. Explain the need for regulating money supply.                      5

Ans.:- Monetary Policy:- Monetary policy, measures employed by government by influence economic activity, specifically by manipulating the supplies of money and credit and by altering rates of interest.

The usual goals of monetary policy are to achieve or maintain full employment, to achieve or maintain a high rate of economic  growth , and to stabilize of prices and wages. Until the early 20th century, monetary policy was thought by most experts to be of little use in influencing the economy. Inflationary trends after World War II, however, caused governments to adopt measures that reduced inflation by restricting growth in the money supply.

15. Complete the following table :          5

 Output (Units) Total Cost (Rs.) Marginal Cost (Rs.) Average Variable Cost (Rs.) 0 1 2 3 4 5 24 40 48 60 88 124 - - - - - - - - - - - -

Ans.:-

 Output (Units) Total Cost (Rs.) Marginal Cost (Rs.) Average Variable Cost (Rs.) 0 1 2 3 4 5 24 40 48 60 88 124 24 16 8 12 28 36 0 40 24 20 22 24.8

16. List the sources of revenue receipts and capital receipts of government budget.                      8

Ans.:- Revenue receipts :- Government receipts which neither create liabilities nor reduce assets are called revenue receipts. These are proceeds of taxes, interest and dividend on government investment, cess and other receipts for services rendered by the government. These are current income receipts of the government from all sources. Government revenue is the means for government expenditure.

Capital receipts :- Government receipts which either create liabilities or reduce assets are called capital receipts. Thus when govt. raise funds either by incurring a liability or by disposing off its assets, it is called a capital receipt.

(a)Two examples of Capital Receipts which create liability are Borrowing and raising of funds from Public Provident Fund and Small Saving Deposits.

(b) Two example of Capital Receipts which reduce assets are Disinvestment and Recovery of Loans. Disinvestment by government means selling a part or whole of its shares of public sector undertakings. Funds raised from disinvestment reduce government assets. Recovery of loan is also capital receipt as it reduces government assets.

17. Explain, in brief, any four objectives of economic planning in India.                                                                8

Ans.:- Major objectives of economic planning in India:-

(1)    Economic Growth:-  Attainment of higher rate of economic growth received topmost priority in almost all the Five Year Plans of the country. As the economy of the country was suffering from acute poverty thus by attaining a higher rate of economic growth eradication of poverty is possible and the standard of living of our people can be improved.

(2)    Attaining Economic Equality and Social Justice:- Reduction of economic inequalities and eradication of poverty are the second group of objective of almost all the Five Year Plans of our country particularly since the Fourth Plan. Due to the faulty approach followed in the initial part of our planning, economic inequality widened and poverty became acute.

(3)    Achieving Full Employment:- Five Year Plans of India gave importance on the subject to employment generation since the Third Plan. The generation of more employment opportunities was considered as an objective of both the Third and Fourth Plan of our country. But up the Fourth plan employment generation never received its due priority. The Fifth Plan in its employment policy laid special emphasis in absorbing increments in labour force during this Fifth Plan Period.

(4)    Attaining Economic Self-Reliance:- One of the very important objectives of Indian Planning is to attain economic self-reliance. But this objective attained its importance only since the Fourth Plan, when the plan aimed at elimination of the import of food-grains under PL480. The Fifth Plan also laid much importance on the attainment of self-reliance.

18. Calculate National Income from the following data :     8

 (Rs in crores) 1)            Compensation of employees 2)            Rent 3)            Interest 4)            Profit 5)            Net indirect taxes 6)            Net factor income from abroad 7)            Mixed income 700 200 150 350 100 (–) 50 250

19. Explain the changes that take place when there is excess supply of a commodity.             8

Ans.:- Excess Supply:- Excess Supply is a market condition when the quantity supplied is greater than the demand for a commodity at the prevailing market price. It occurs at a price greater than the equilibrium price level. As the price will be greater than the equilibrium price the sellers would sense this as an opportunity to earn greater profits and would pump in the supply.

This would lead to an effective increase in stocks and a tough competition among the sellers to sell their respective supplies. Consequently, to sell more supply, suppliers would start decreasing the prices to sell the excess stock. This decrease in price maneuvers the market supply and market demand which fall (law of supply) and rise (law of demand) respectively.

This self-adjusting mechanism pulls the price back to the equilibrium level. Effectively excess supply is wiped out of the market.

20. From the following data, calculate arithmetic mean by ‘step deviation method’ :                     8

 Class Frequency 0-10 10-20 20-30 30-40 10 12 14 4

Solution:-

SECTION–B

OPTION–I

( Role of Agriculture and Industry in India’s Economic Development )

21. Describe any two roles of agriculture in Indian economy.                                                                     5

Ans.:- Two important roles of agriculture in Indian economy are:-

1)      Contribution to National Income:- From the very beginning, agriculture is contributing a major portion to our national income. In 1950-51, agriculture and allied activities contributed about 59 percent of the total national income. Although the share of agriculture has been declining gradually with the growth of other sectors but the share still remained very high as compared to that of the developed countries of the world. For example, the of agriculture has declined to 54 percent in 1960-61, 48 percent in 1970-71, 40 percent in 1980-81 and then to 18.0 percent in 2008-09, whereas in U.K. and U.S.A. agriculture contributes only 3 percent to the national income of these countries.

2)      Source of Livelihood:- In India over two-thirds of our working population are engaged directly on agriculture and also similarly depend for their livelihood. According to an estimate, about 66 percent of our working population is engaged in agriculture at present in comparison to that of 2 to 3 percent in U.K. and U.S.A., 6 percent in France and 7 percent in Australia. Thus the employment pattern of our country is very much common to other under-developed countries of the world.

22. How do industries help in exploiting natural resources? Explain with the help of suitable example.                               5

Ans.:- The exploitation of natural resources is the use of natural resources for economic growth, sometimes with a negative connotation of accompanying environmental degradation. It started to emerge on an industrial scale in the 19th century as the extraction and processing of raw materials (such as in mining, steam power, and machinery) developed much further than it had in preindustrial areas. During the 20th century, energy consumption rapidly increased. Today, about 80% of the world’s energy consumption is sustained by the extraction of fossil fuels, which consists of oil, coal and gas. Another non-renewable resource that is exploited by humans is subsoil minerals such as precious metals that are mainly used in the production of industrial commodities. Intensive agriculture is an example of a mode of production that hinders many aspects of the natural environment, for example the degradation of forests in a terrestrial ecosystem and water pollution in an aquatic ecosystem. As the world population rises and economic growth occurs, the depletion of natural resources influenced by the unsustainable extraction of raw materials becomes and increasing concern.

23. How is agricultural sector a source of funds for industrial sector? Explain.                                    5

Ans.:- Agriculture and industry are interdependent on each other or the economic progress of a country. While agriculture produces the basic supply of food required for human survival, it also produces cash crops like jute, cotton etc that are processed by industry for human requirements like clothing and packaging. Many other important products, like paper for instance, are produced from agricultural produce. Industry also produces or processes articles from mined products like iron ore, mica and bauxite; these are utilized or used by other industries or human beings. Therefore, agriculture and industry go hand in hand in taking the country forward.

OPTION–II

( Population and Economic Development )

21. Describe the trends of birthrate and death rate in India since 1951. 5

Ans.:- Birth rate and death rate in India are very high as against many countries of the world.

Number of children born per thousand persons in a year is called birth rate.

Number of persons dying per thousand in a year is called death rate. It is said that birth rate in India is 25, it means that in India 25 babies are born per thousand persons in a year.

The following table shows the position of birth rate and death rate of India in the last 100 years:

 year Birth Rate Death Rate Growth Rate 1901-1910 1911-1920 1921-1930 1931-1940 1941-1950 1951-1960 1961-1970 1971-1980 1981-1990 1990-1991 1995-1996 1991-2001 49.2 48.1 46.3 45.2 39.9 41.7 41.2 37.2 32.5 29.5 28.3 25.8 42.6 47.2 36.3 31.2 27.4 22.8 19.0 15.0 15.0 9.8 9.0 8.0 6.6 .9 10.0 14.0 12.5 18.9 22.2 22.2 21.2 19.7 19.3 17.1

It is only after 1961 that due to intensive family planning propaganda that some decline in birth rate is visible. In 2000, birth declined to 25.8 per thousand while death rate has been 8.5 per thousand. Birth rate being more than the death rate, growth rate has been rising rapidly. Birth rate and death rate in India are higher than the birth rate and death rate of many other countries of the world.

22. Explain the effects of growth rate of population on human resources.          5

Ans.:- The concern of this discourse on social development planning was that individuals be part of human resources development population growth is an obstacle to social development, but so is national expenditures on the military rather than diverting funds for social improvements. There are important benefits for society in social development: a valued consumption good, increased productivity, and reduced fertility. Dissatisfaction with an economic growth model of development occurred during the 1960s and by the mid-1980s, human resource development was capsuled in Asia and the Pacific Region in the Jakarta Plan of Action on Human Resources Development and adopted in 1988. Earlier approaches favored the supply side. This article emphasizes “human” development which considers people as more than inputs to productivity. The quality of human resources is dependent on the family and society, the educational system, and individual levels of health and nutrition. Differences in income levels between East and South Asia have been attributed by Oshima to full use of the labor force and mechanization and training of workers. Ogawa, Jones, and Williamson contend that huge investment in infrastructure, efficient absorption of advanced technology, a stable political environment, and commitment to human capital formation are key to development. Demographic transition and decline in fertility at one point reflect growth and engagement in the labor force and resource accumulation.  Although East Asia had higher levels of literacy and educational attainment than many developing countries, South Asia still has high fertility. Human resource development is dependent on reduced population growth rates, but rapid population growth is not an insurmountable obstacle to achieving higher levels of education.

23. Explain the reasons for slow growth rate of population in underdeveloped economies.        5

Ans.:- The following are the reasons for slow growth rate of population in underdeveloped economics are:-

1)      High Growth Rate of Population:- Rate of growth of population being an important determinant of economic growth, is also responsible for slow growth of national income in India. Whatever increase in national income has been taking place, all these are eaten away by the growing population. Thus high rate of growth of population in India is retarding the growth process and is responsible for this slow growth of national income in India.

2)      Excessive Dependence on Agriculture:- Indian economy is characterized by too much dependence on agriculture and thus it is primary producing. The major share of national income that is usually coming from  the agriculture which is contributing nearly 34 percent of the total national income and engage about 66 percent of the total working population of the country. Such excessive dependence on agriculture prevents quick rise I the level of national income as well as per capita income as the agriculture is not organized on commercial basis rather it is accepted as way of life.

3)      Occupational Structure:- the peculiar occupational structure is also responsible for slow growth of national income in the country. At present about 66 percent of the working force is engaged in agriculture and allied activities, 3 percent in industry and mining and the remaining 31 percent in the tertiary sector. Moreover, prevalence of high degree of under-employment among the agricultural laborers and also among the work force engaged in other sectors is also responsible for this slow growth of national income.

4)      Low Level of Technology and its Poor Adoption:- In India low level of technology is also mostly responsible for its slow growth of national income. Moreover, whatever technology that has been developed in the country, Is not properly utilized in its production processes leading to slow growth of national income in the country.

5)      Poor Industrial Development:- Another important reason behind the slow growth of national income in India is the poor rate of development of its industrial sector. The industrial sector in India has failed  to maintain a consistent and sustainable growth rate during the planned development period and more particularly in recent years. Moreover, the development of basic industry is also lacking in the country. All these have resulted a poor growth in the national income of the country.

***